California Housing: 1 out of every 192 Homes in Trouble. Top Ranking State in the United States.

13 07 2008

California Housing: 1 out of every 192 Homes in Trouble. Top Ranking State in the United States.

Posted by: admin in Real-estate news

The foreclosures numbers for the month of June did not give us any hint of a second half recovery. The lunacy of some of the politicians out there is simply baffling. Apparently the current recession is now all in our heads: “(CNN) Obama was responding to comments from Phil Gramm, a former Texas senator […]
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“(CNN) Obama was responding to comments from Phil Gramm, a former Texas senator and a co-chair of McCain’s presidential campaign who told the Washington Times that America has “become a nation of whiners” and the country is in the midst of a “mental recession.”

We have sort of become a nation of whiners. You just hear this constant whining, complaining about a loss of competitiveness, America in decline,” he said. “You’ve heard of mental depression; this is a mental recession.”

Maybe Fannie Mae and Freddie Mac falling through a sinkhole is just in our imagination. The 35% housing median price decline in California is a figment of our imagination. Let us click our heels twice and we’ll be fine. This is the same genius that repealed the Glass-Steagall Act with his Gramm-Leach-Bliley Act in 1999. The problem with keeping up pretenses is pathetic and simply ingenious. How can someone say this is a mental recession? What in the world is that anyways? This is the same delusional Horatio Alger mantra of pulling yourself from your bootstraps; but that only works when you have a government looking out for you and not selling out your country to the highest bidder (by the way, you can now call the Chrysler building the Abu Dhabi building). This isn’t a free market. This is a free market for those with $5 million+ in a Wall Street investment bank. Why didn’t Phil tell Bear Stearns to suck it up and deal with their “mental recession” - instead, if you are a middle class American you need to suck up the fall in the dollar, the declining housing market, and higher fuel prices.

California has the highest foreclosure rate in the entire country. Of course we would have the highest number simply because of our size but now, we have the highest percentage with 1 out of every 192 homes being in some sort of distress. Here are the raw numbers as provided by RealtyTrac:

Notice of Defaults: 37,989

NTS: 10,053

REO: 20,624

1/every x HH in trouble: 192

Percent increase from 2007: 76.97%

Now if you want to see how these numbers look for the nation, take a look at this graph:

The nationwide trend is still high and we are looking at having our worst year in terms of foreclosures. And just wait until the $300 billion Pay Option ARMs in California recast hitting in full force during the 2^nd half.

Even Ken Lewis, CEO of Bank of America is pessimistic on California which is rather “shocking” given they just bought uber mortgage stunt dummy Countrywide who had nearly 40 to 50 percent of their mortgage portfolio in the state. Here is what Ken Lewis had to say:

“(LA Times) But he added that Wall Street clearly didn’t believe him on those issues, given how far Bank of America’s stock has fallen in recent months. It fell $1.48 to $22.06 on Wednesday, and is down 46% year to date.

As for the housing market, Lewis said Bank of America’s latest forecast called for a further 15% decline in home prices nationwide, with the decline going into at least the first quarter of next year.

In the case of California, Florida and other markets that had the biggest booms, a further 20% decline is more realistic, he said.”

So you just bought a lender with nearly half their portfolio in the state you are predicting to go down by an additional 20%? Smart move. No wonder why Bank of America stock is being punished:

You need to remember that much of that REO count isn’t in the MLS. For some reason it seems like lenders are artificially keeping these things off their books to make their 1^st half earnings look stronger. From a few sources and agents I have heard that lenders are simply not putting some listings into the MLS. Let us look at the current Southern California market:

Current Inventory: 140,867

Distressed MLS Number: 21,286 (15%)

May 2008 Sales: 16,917

But what about that 20,624 number? The massive disruption here is that inventory numbers have been steadily decreasing and those 20,000+ REOs simply do not appear in that overall MLS inventory number. What a freaking shocker. You may get a few replacing the current sales but the numbers do not jive. I would venture to say that come this fall, there is going to be this massive correction that is going to overwhelm the system.

Recently I’ve also noticed that the e-mails about people wanting to buy have gone silent. During the first 3 months of the year, every day I would get an e-mail about “is this the bottom” or “I think it is a good time to buy right now.” Those e-mails are no longer coming. Now I get more e-mails asking about wealth preservation and protecting your current assets. Want to see what people are starting to search for:

I also took a quick glance for the last 10 days and did not see coupons in any of the top 100 trends. Maybe people are feeling the pinch? I wonder if they are searching for virtual coupons to be used in their make believe recession?

The market is much worse than it appears but all the above numbers are all in your head. It turns out all we need to make this better is a shrink and two Prozac pills.

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